Great news: Jobless rate expected to drop in 2012 to … 8.5%

posted at 11:36 am on November 10, 2010 by Ed Morrissey

In a measure of just how much the lack of economic growth under Barack Obama has impacted expectations, The Hill predicts that Obama may have a much better re-election campaign in 2012 because of a decline in the unemployment rate. How big a decline? Economists predict that it will have dropped just one percentage point from its current 9.6% level to 8.5%, a number that will supposedly put a strong wind at the backs of incumbents, according to one economist and political analyst:

Economists who study the labor market said this week that they expect unemployment in 2012 to average 8.5 percent, down more than a point from the 9.6 jobless rate of today.

Heidi Shierholz, an economist at the Economic Policy Institute, said every forecast she has studied predicts rapid job growth in 2012, even though the national number will still be a far cry from full employment.

“It’s still going to be so high in 2012, but people are going to be feeling better,” Shierholz said.

Mark Zandi, the White House’s favorite economist to quote because of his advisory role with Sen. John McCain’s (R-Ariz.) 2008 presidential campaign, sees the same picture.

Zandi said Obama’s stimulus plan has achieved its goal. The plan, Zandi said, prevented another Great Depression while giving the public sector time to kick in and start hiring, which will be in full effect when Obama is running for reelection.

“The trend is going to be in strong favor of incumbents in 2012,” said Shierholz.

I really don’t think so, though Ms. Shierholz from the liberal EPI would surely like that to be the case. There is a huge lag between what the numbers say about the economy and what people perceive. Bill Clinton won the 1992 election on the economy (”it’s the economy, stupid”) even though GDP had been growing for six full quarters. According to Gallup, 88 percent of Americans thought the economy was “fair” or “poor” in October 1992 with some 60 percent saying the economy was “getting worse.”

Two years later, it was the Democrats turn to feel the brunt of widespread economic anxiety as the Republicans captured both the House and the Senate. Even though the economy had then been growing for 14 straight quarters and the unemployment rate was down to 5.8 percent, 72 percent of Americans still thought the economy was “fair” or “poor” and 66 percent though the nation was headed in the wrong direction. Hard to believe, but 3 1/2 years after the 1990-91 recession ended, the economy was still a big negative for voters and hurting the incumbent political party.

So let’s say the unemployment rate is 8.5 percent on Election Day 2012. That is twice as high as what Americans have grown accustomed to. As recently as May 2007, it was 4.4 percent. It was also under 5.0 percent from July 1997 through August 2001. And before this recession, Americans hadn’t seen 8.5 percent unemployment since 1983. In addition, housing will still be in the tank, and budget deficits will still be in the stratosphere. Morning in America II? Good luck with that.

The truly analogous period isn’t 1990-1994 but 1980-1984. In that period following a solid decade of stagnation and runaway inflation (for the US, anyway), the voters gave the boot to a President who tried to sell that as the New Normal in his infamous “malaise speech.” During that year, unemployment grew from 6.3% to a peak of 7.8% during the summer, with a level of 7.5% just before the election. Reagan won the election in part because of frustration over economic drift and in part because of Jimmy Carter’s demonstrated impotence on the international stage after Iran took our embassy staff hostage for 444 days and the Soviets overran Afghanistan.

Afterward, as Reagan implemented recessionary policies in order to wring poison out of the American economy as well as dismantled overreaching regulatory obstacles to growth, joblessness peaked at 10.8% in November 1982. The GOP received a moderate rebuke in those midterms, but nothing on the scale of the first midterms of Clinton and Obama. Why? Because even though those policies had resulted in record unemployment, voters also saw light at the end of the tunnel as the economy began to improve. Two years later, the jobless rate had dropped by a third to 7.2% — still on the high side — and voters rewarded Reagan with a landslide victory of 49 states.

A reduction of a single percentage point in joblessness won’t move the needle for Obama. By the calculations of his economic team, Obamanomics was supposed to prevent unemployment from going above 8% in the first place. By that point, Obama will have had more than three years to improve the economic environment, and 8.5% won’t be seen by anybody as success in that effort. Not only will Obama have a difficult time justifying another four years of malaise in that set of circumstances, but Democrats in the Senate will be defending 13 more seats in the upper chamber than Republicans on the basis of that failure at the same time.

It won’t be a wind at the backs of Democrats in that environment; it will be a boot at their backsides.

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No one can predict what unemployment will look like. Their premise is garbage. The public sector was able to hire? Who is going to pay for those public jobs? Are these insane fools planning on creating even more public jobs?

These people just have no idea, but their little plan to manipulate the numbers for Obowma in 2012 will fail. It will also be a long term disaster.

Is that also assuming the Bush tax cuts are extended? Let those expire and that number will be much higher.

Here’s an idea. Start making our own stuff! China loses the business and we employee our people. wow what a concept.
Lets start with kids toys maybe, Tonka trucks that last forever like they used to. Or Car parts. Ones that last forever like they used to. Or one of countless other items those clowns make for us that we gobble up like candy.

Meanwhile I see Chinese Nationals in our most advanced Spacecraft development areas. Then there’s this link you can see, with B.O. bowing to these jokers while they look stunned.B.O. and our job suckers

By the calculations of his economic team, Obamanomics was supposed to prevent unemployment from going above 8% in the first place.

That’s gonna be his undoing if the unemployment rate is above 8% come 2012. That Porkulus promise has become Obama’s version of “read my lips” or “no WMDs”. It’ll haunt him for the rest of his political career.

And it also doesn’t help matters that an 8.5% rate would be nearly a point higher than what it was when he was inaugurated.

Our landills are filling up wth Chinese crap that employed ‘their’ people. This needs to change. It doesnt take a genius to figure this out nor does it take Rush LImbaugh to tell it to you. (sorry Rush)

Sorry for the multiple posts but prices are going to go up anyway. We may as well make products here in the good ole USA. You want the old America back? Well, old America made its own stuff and didnt contract it all out overseas. China is also steaing our Space Tech next and thats all we have left that sets us apart from them. We spent a lot of money to get where we are in Space. They are walking up and acting like Pro’s without as much as a Space accident.

For Obama to be even competitive, it has to get below 8%. His admin made that number, and the GOP will do nonestop attack ads on it. My guess for zero to be competitive the rate has to get near 7%; otherwise people will still think it’s a recession or jobless recovery. People have many other things to be angry at Obama than to just keep him for little progress.

For Obama to be even competitive, it has to get below 8%. His admin made that number, and the GOP will do nonestop attack ads on it. My guess for zero to be competitive the rate has to get near 7%; otherwise people will still think it’s a recession or jobless recovery. People have many other things to be angry at Obama than to just keep him for little progress.

TimTebowSavesAmerica on November 10, 2010 at 11:53 AM

With the state run media convincing the sheeple that things have turned the corner and on the way to recovery he’ll have less of a problem than you think.

First off, in 2012 the MSM will be running daily stories about hoe dumb it is to believe the economy is bad, which wasn’t the case in 1992. So that will help Obama. But to balance that the Republicans in Congress will have had two years to do something. If, say, there are no more massive regulation increases or massive tax increases or massive dislocations due to Obama’s next scheme then it’s entirely possible the public will give them credit for any improvement.

I hear what you’re saying, but you overestimate the msm’s power. They’re getting weaker every year. Mac would’ve won in 08 without the econ collapse. Fox will be 24/7 pushing the other meme. Plus, zero is radioactive in FL, OH, maybe even PA. Above 7%, the election is nearly over if we can put up someone decent, with an hispanic vp.

These analysts are idiots. People don’t sit around and cheer on 1 point drops or obsess over the unemployment rate, they look at their situation and that of the people around them and vote on how secure they feel in their job, if they even have a job, and if they are getting paid enough to make ends meet.

percentage points and numbers mean nothing and 8.5% is still very high and doesn’t measure “real unemployment”.

These predictions are not simply “innacurate.” It doesn’t even make any damned sense to try to directly predict unemployment in the first place.

Of course joblessness is not an independant factor; it is a function of economic growth. You have to assume the economy is going to grow by a certain amount, and then backtrack job requirements based on that. And, before you do that, you have to assume an increase in investment capital, and then take a guess as to its likely productivity.

And what is that fundamental assumption based on? I’d bet a fair amount of money that none of these self-proclaimed “economic experts” have ever even MET a real-life entrepreneur, let alone have the faintest clue what any of us are planning to do next year.

Zandi said Obama’s stimulus plan has achieved its goal. The plan, Zandi said, prevented another Great Depression while giving the public sector time to kick in and start hiring, which will be in full effect when Obama is running for reelection.

They just can’t bring themselves to quit spouting this myth. Just because Zandi was McCain’s advisor means squat! It’s already been established that the recession was over about the time the first few $ of porkulus hit the street. It certainly didn’t save us from depression, and in all likelihood, contributed in slowing the jobless recovery along with all the other Democrat “accomplishments”.

So far the liberal “economists” have been UNEXPECTEDLY wrong about everything. If their month to month predictions have been so bad, what makes them believe predictions 2 years in advance will be any better?

Sounds like nothing more than wishful thinking.

Or is it that they are counting on the Republicans to pull their asses out of the fire?

I knew things would start looking up as soon as we took over the Congress, and I was worried about Barry riding a clintonesque wave into re-election. The difference being the Senate, with the GOP owning both houses Clinton didn’t have much of a choice, Barry the narcissistic and chief will fight and keep things gridlocked, that way we still win.

I doubt if you’re old enough to remember that after WW 2, the Marshall Plan re-built German and Japanese industries from the ground up. If you’re not familiar with the name of William Deming, (“It is not necessary to change. Survival is not mandatory.” “The customer is the most important part of the production line.” And one of my favorites, “Information is not knowledge. Let’s not confuse the two.”) you may want to look him up. From http://www.quotesdaddy.com/ “Deming made a significant contribution to Japan’s later renown for innovative high-quality products and its economic power. He is regarded as having had more impact upon Japanese manufacturing and business than any other individual not of Japanese heritage.”

A big part of our problem in the last 50 years has been the inability or unwillingness of American business to stay competitive. Part of that is assignable to labor unions, part to incompetent management, but a large part to government meddling where government is totally out of place. You cannot build, or significantly improve production facilities, when bureaucrats are watching your every move, waiting to obstruct your efforts and your dealing with tax laws of such complexity that even the people who write them can’t understand them. As Mr. Reagan used to say, government is NOT the solution, government is the problem. But until the citizens of the Republic are willing to believe in themselves for solutions more than they believe in Big Brother, I fear we will continue to sink.

Even if Obama finds a way to brag about 8.5% unemployment….the Republicans will certainly share in this “progress”.
We already have liberals blaming Boehner for the lack of jobs and he has not even taken the gavel yet.If they choose to put him front and center….he will be able to lay claim to part of this recovery.

I see the democrats bragging about this going over about as well as their bragging about “recovery summer” and Pelosi’s bragging about “reducing the deficit.”

The reality of the situation for Americans won’t match the rhetoric coming out of the democrats mouths.

…Here is a good graph and analysis about what it is going to take to get unemployment down to reasonable levels:

The slope of the red line is the Democrat-killer. It takes 230,00 jobs per month to break even assuming a static labor force, and 90,000 more to accommodate labor force growth. In other words, for Obama (and the Democrat Senate) to get back to normal by the end of 2016, he needs to enact policies that create more than 310,000 jobs per month starting right now. His presidency just gets worse every month he falls short of that goal.

These numbers are for getting back to Bush level unemployment not the 8.5% that this economist is forecasting.It still will take over 100,000 jobs a month just to keep pace…much less start to bring down the numbers that also include the people who have dropped out of the job market or having to work part time.

I have a hard time seeing all this happening when most forecasters are predicting anemic GDP around 2.5%.

There is a reason that Obama is getting ready to get his butt handed to him again at the G20…..his Keynesian policies are only successful on paper and in coffee shop conversations….they have been an utter failure in the real world.

You want the old America back? Well, old America made its own stuff and didnt contract it all out overseas. China is also steaing our Space Tech next and thats all we have left that sets us apart from them. We spent a lot of money to get where we are in Space. They are walking up and acting like Pro’s without as much as a Space accident.

johnnyU on November 10, 2010 at 11:51 AM

I work in China for a major American-based technology company. We have thousands of engineers, not factory workers, employed in China. The primary motivation isn’t cost savings, though that does play a small part.

The primary reason is that we can’t find enough high-quality engineers in the US. I’ll grant you that US-educated engineers are still on average superior to their counterparts in China, but because of the sheer number of engineering graduates in our field in China, we can find plenty here that meet the bar.

If America wants to retain it’s competitive edge, many more people need to go into engineering and technical fields, simple as that.

Mark Zandi is an idiot. We DO have another Great Depression. Functional unemployment today is close to 20%. Plants are closed. Businesses have died. Home values have fallen 30% and over 50% in some markets. Hundreds of smaller banks have failed. Millions are reaching the end of 99 weeks of unemployment compensation.

There’s no doubt that government programs like Social Security, food stamps, and extended unemployment benefits have kept us from SEEING this as we saw the Great Depression. People aren’t selling apples on streetcorners or standing in block-long soup-kitchen lines. But it’s absurd for anyobe, especially an economist, to sday this isn’t another depression we are in, or that it could have been a lot worse without the government throwing $800 billion into a rathole.

People will have to change their shopping habits. This can’t be forced. Well unless you want to impose some crazy tariffs, but that’s a messy can of worms.

People buy junk and toss it away, then buy more junk to replace it.

Those habits will be painfully slow to change.

reaganaut on November 10, 2010 at 11:57 AM

It’s not even as easy as that. Take, for instance, the ridiculous hoops you have to jump through here to get a handmade toy or piece of child’s clothing to market make it impossible to do it small-scale. Every single kind of thread has to be tested, every fastener, every scrap of wood, every dot of paint no matter how small before you can use it.

No one can afford the testing except the big toy companies so that is where all the toys come from. And, of course, big companies are the ones who buy from China or where ever to cut costs.

Honestly, I wouldn’t be a bit surprised if the big toy companies weren’t behind some of the lead toy scare stories. Or even if they weren’t behind the stories I guarantee they and their lobbiests were behind the new regulations. That way they can weed out the competition. Never let a crisis go to waste and all that.

Doesn’t ANYONE care that the stock market has gone up by over 15% since September 1? That’s about the time it became apparent that the Republicans would win the House and Obamanomics was dead. Similarly, the stock market started falling in September of 2008, not because of the banks but because Obama took the lead in the polls. The market crashed in March of 2009 right AFTER the Porkulus bill passed, the GM/Chrysler takeovers happened, and Obama released his first budget, which read more like The Communist Manifesto than a budget.

Investors are betting today on higher corporate profits tomorrow. But as we have seen in the last year, companies can make more money for stockholders without hiring more workers. That’s a function of confidence, tax policy, and labor policy. It will take some time for those to improve.

Everytime there is a successful business the Union leaches surface. My church hired a non union contractor to pour the forms for the new parking structure we’re building. This contractor came in at one third of what union contractors wanted so they got the job. Now the union is picketing out front of the church everyday!

..and you forgot the environmental demands, the ones China et all totally ignore, just because the western elitists are hypocrites.

Schadenfreude on November 10, 2010 at 12:43 PM

Not just environmental, but worker safety standards are almost nonexistent in China too. The number of deaths and injuries every year in industrial accidents there are huge, and would never be tolerated in the U.S. The incidence of major toxic spills and releases into drinking water sources is also something that would not be tolerated in the U.S. The air in Beijing is about like it was in L.A. or Chicago 40 years ago. People grow up there not even knowing what clear air looks like. And other than the giant panda which is loudly and publicly protected, wildlife is disappearing at an alarming rate in China.

Not just environmental, but worker safety standards are almost nonexistent in China too. The number of deaths and injuries every year in industrial accidents there are huge, and would never be tolerated in the U.S. The incidence of major toxic spills and releases into drinking water sources is also something that would not be tolerated in the U.S. The air in Beijing is about like it was in L.A. or Chicago 40 years ago. People grow up there not even knowing what clear air looks like. And other than the giant panda which is loudly and publicly protected, wildlife is disappearing at an alarming rate in China.

rockmom on November 10, 2010 at 1:07 PM

Well, I think given a choice between no work with clean air and wildlife all around or work with dirty air and no wildlife, most people choose option 1. Kinda hard to enjoy the clean air and abundant wildlife when you’re hungry.

Increasingly the stuff you buy with American trademarks is not only made in China, but also engineered in China.

DarkCurrent on November 10, 2010 at 1:26 PM

Maybe, in the interest of free trade we could offer them, say 22 women’s studies majors for every engineer they send us.

I realize that parents do not always have a say on what their kids go to school for, but why in the world don’t more of them get a clue?

Research the kinds of degrees that get your kid’s jobs. Students who do well in engineering get Paying Jobs as summer interns. Good paying jobs. As sophomores in college even. Most engineering students have good paying jobs waiting for them when they graduate.

Pundits focus on the economy like a laser beam – as if it’s the most important factor to American voters.

I ask everyone reading this – “Is the ECONOMY really what you base your vote on?”

Most all of you will say … “No … not by a long shot”.

So we all assume that WE are “so smart” but the rest of Americans are stupid and vote accoring to a two-dimensional yardstick – the economy. That’s a pretty elitist attitude to take toward Americans. Americans aren’t sheep – they don’t just say … “I’m hurting – I will vote for the other guy”. Please.

As Ed states – voters gave Reagan a slight rebuke in the midterms and a landslide victory in ’84 – and he had high unemployment throughout. So … I’m sorry – it’s not “the economy stupid”.

The economy is ONE BENCHMARK of a bad / or good President. Performance as Command in Chief is another … there are many others.

If he thinks the new normal in America is going to be 8.5% and expects us to be happy about it, then mo’ fracker better get used to 100% unemployment in his own house next to Tony Rezko’s lawn back in Chitown.

Don’t bank on even 8.6% Unemployment. You could have just as easily see 10%. I could see a scenario where the stagnation creates a spooked business herd that suddenly downsizes or contracts. These people sitting on cash are not going to hold their judgement for which way the economy is going forever. I have watched the “herd” before. A selloff in the stock market or something else could EASILY start an economic slide under these tense conditions Obama and the Democrats have created. What does anyone think good reeelction numbers for Obama for example will make investors do for instance? Everything on the upside will be predicated on the notion we are done with this socialism crap and that is fragile by it’s very nature. Reactions to bad news right now could exaggerate. I am confident about that much.

If unemployment is below 9% in 2012, Obama wins re-election. It’s progress and people won’t want to tip the boat.

lorien1973 on November 10, 2010 at 11:48 AM

You’re kidding, right? You mean Nov. 2 wasn’t an indication of the future? Makes a whole lotta sense to me: multiple millions of people out of work will gladly cast their vote 2012 for Obama.

You have a very low view of your fellow Americans, don’t you?

Richard Romano on November 10, 2010 at 2:46 PM

I’ve got to agree with lorien. The press will be full of reports and charts showing how Obama has lowered unemployment, and analysts will be pontificating on how it would be even lower if not for GOP obstructionists.

Plus, it would be racist not to reelect the second First Black President.

This isn’t 1996. Press cheer leading isn’t going to have near the impact for the big 0 as it did for Clinton. Meanwhile the Repubs will get credit IF they pass measures that “may” stimulate job growth, and force Obama to sign them.
But I don’t believe the projections anyway. There will be no “certainty” in business creation even with an extension of the current tax code. 2011′s gonna be a tough year.
Randy

Don’t you know Barry is gonna go out there and say, “Just be glad it’s not 16%!” and the lap dogs in the media will salivate all over that 8.5% as if it is the second coming of Ronald Reagan and the idiots that don’t pay attention until election day will pull the lever for him again!